Dubai Company Formation

Tax 2 min read

Relief from the tax is not relief from the return

A small cut-paper form sheet on a teal ground beside a much larger one, both with the same ruled lines

The most expensive misreading of UAE corporate tax is the one that sounds like good news. On 3 August the Federal Tax Authority issued a reminder aimed squarely at it.

The reminder

Businesses eligible for Small Business Relief must still submit a corporate tax return. The relief reduces what the return contains; it does not remove the obligation to file one.

What the relief actually does

Small Business Relief treats an eligible resident person as having earned no taxable income for corporate tax purposes, provided revenue does not exceed Dh3 million in the relevant tax period and in all previous tax periods. That second clause is the one that catches people: a single earlier year above the threshold ends eligibility.

The relief is not automatic. It is elected through the corporate tax return itself, which is the mechanical reason a return has to exist at all.

The filing deadline

A business whose financial year ended 31 December 2025 must file and pay by 30 September 2026. The general rule is nine months from the end of the tax period.

The obligations that survive the relief

The FTA lists them plainly: register for corporate tax, submit the simplified return, and maintain records sufficient to support what the return says. H.E. Abdulaziz Mohammed Al Mulla, the Authority's Director General, framed the announcement as part of a service-improvement programme rather than a change of rule.

The phrase to read twice is "and all previous tax periods". Eligibility is not assessed year by year against a Dh3 million line; one prior period over it disqualifies the company permanently for this relief, so a business that had a strong 2024 and a quiet 2025 does not qualify on the strength of 2025. The other trap is the word simplified. A simplified return is still a return with a filing date attached, and the late-filing penalty does not care that the tax due was nil — which is exactly the combination that produces a fine on a company that owed nothing.

Source: Federal Tax Authority checked against the source

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